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U.S.-France Estate Tax Treaty

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U.S.-France Estate Tax Treaty U.S.-FRANCE ESTATE TAX TREATY Convention between the government of the United States of America and the government of the French Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on estates, inheritances, and gifts signed at Washington on November 24, 1978, amended by the Protocol signed at Washington on December 8, 2004. The President of the United States of America and the President of the French Republic, desiring to conclude a convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on estates, inheritances, and gifts, have appointed for that purpose as their respective plenipotentiaries: The President of the United States of America: The Honorable George S. Vest, Assistant Secretary of State for European Affairs, The President of the French Republic: His Excellency Francois de Laboulaye, Ambassador of France, who having communicated to each other their full powers, found in good and due form, have agreed upon the following provisions. Article 1 Estates and Gifts Covered (1) This Convention shall apply to estates of decedents whose domicile at death was in France and to estates of decedents which are subject to the taxing jurisdiction of the United States by reason of the decedent's domicile therein or citizenship thereof at death. (2) This Convention shall also apply to gifts of donors whose domicile at the time of making a gift was in France, and to gifts which are subject to the taxing jurisdiction of the United States by reason of the donor's domicile therein or citizenship thereof at the time of making of a gift. (3) A person who at the time of death or the making of a gift was a resident of a possession of the United States and who acquired United States citizenship solely by reason of (a) his being a citizen of such possession, or (b) his birth or residence within such possession, shall be considered as having been neither domiciled in nor a citizen of the United States for purposes of this Convention. (4) (a) Notwithstanding any other provision of the Convention, the provisions of this Convention shall not preclude the United States from taxing in accordance with its law the estate of a decedent or the gift of a donor who, at his death or at the making of the gift was i) a citizen of the United States, ii) domiciled (within the meaning of Article 4) in the United States, or iii) a former citizen or long-term resident whose loss of such status had as one of its principal purposes the avoidance of tax (as defined under the laws of the United States), but only for a period of ten years following such loss. (b) Subparagraph (a) of this paragraph 4 shall not, however, affect the obligation undertaken by the United States under: (i) Article 10; paragraph 2 of Article 11; paragraphs 2 or 8 of Article 12; Article 13 or Article 14; (ii) paragraph 3 of Article 11 as applied to the estates of persons other than former citizens or long-term residents referred to in subparagraph (a) of this paragraph 4; or (iii) the benefits conferred by the United States under Article 17, as applied to transfers by individuals who are neither citizens of, nor have immigrant status in, the United States. Article 2 Taxes Covered (1) This Convention shall apply to: (a) In the case of the United States: the Federal gift tax and the Federal estate tax, including the tax on generation-skipping transfers; and (b) In the case of France: the duty on gifts and the duty levied on succession. (2) This Convention shall also apply to any identical or substantially similar taxes on estates, inheritances, and gifts which are subsequently imposed by a Contracting State in addition to, or in place of, the existing taxes. (3) The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective laws relating to taxes on estates, inheritances, and gifts. Article 3 General Definitions (1) In this Convention: (a) The term "Contracting State" and "other Contracting State" mean the United States or France, as the context requires. (b) The term "United States" means the United States of America and, when used in a geographical sense, means the state thereof and the District of Columbia. Such term also includes any area outside the States and the District of Columbia which is, in accordance with international law, an area within which the United States may exercise rights with respect to the natural resources of the seabed and sub-soil. (c) The term "France" means the French Republic and, when used in a geographical sense, means the European and Overseas departments of the French Republic. Such term also includes any area outside those departments which is, in accordance with international law, an area within which France may exercise rights with respect to the natural resources of the seabed and sub-soil. (d) The term "enterprise" means a commercial or industrial enterprise carried on by an individual domiciled in a Contracting State. (e) Except where expressly stated to the contrary, the term "tax" means the tax or taxes referred to in Article 2 which are imposed by the Contracting State (or Contracting States) as indicated by the context of the term's usage. (f) The term "competent authority" means: (i) In the case of the United States, the Secretary of the Treasury or his delegate, and (ii) In the case of France, the Minister of Budget or his delegate. (2) As regards the application of the Convention at any time by a Contracting State any term not defined therein shall, unless the context otherwise requires, or the competent authorities agree to a common meaning pursuant to the provisions of Article 14 (Mutual Agreement Procedure), have the meaning which it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State. Article 4 Fiscal Domicile (1) For the purpose of this Convention, the question whether an individual was domiciled in one of the Contracting States shall be determined according to the law of that State. (2) Where by reason of the provisions of paragraph (1) an individual was domiciled in both Contracting States, then this case shall be determined in accordance with the following rules: (a) He shall be deemed to have been domiciled in the Contracting State in which he maintained his permanent home; (b) If he had a permanent home in both Contracting States or in neither of the Contracting States, his domicile shall be deemed to be in the Contracting State with which his personal relations were closest (center of vital interests); (c) If the Contracting State in which he had his center of vital interests cannot be determined, his domicile shall be deemed to be in the Contracting State in which he had an habitual abode; (d) If he had an habitual abode in both Contracting States or in neither of the Contracting States, his domicile shall be deemed to be in the Contracting State of which he was a citizen; or (e) If he was a citizen of both Contracting States or of neither of them, the competent authorities of the Contracting States shall determine the Contracting State of his domicile by mutual agreement. (3) (a) Notwithstanding the provisions of paragraph (2), an individual who at the time of his death or the making of a gift was a citizen of one of other Contracting States without being a citizen of the other Contracting State, and who would be considered under paragraph (1) a having been domiciled in both Contracting States, shall be deemed to have been domiciled only in the Contracting State of which he was a citizen, if he had a clear intention to retain his domicile in that Contracting State and if he was domiciled in the other Contracting State in the aggregate less than 5 years during the 7-year period ending with the year of his death or the making of a gift. (b) Notwithstanding the provisions of paragraph (2) or of subparagraph (a) of this paragraph, an individual who at the time of his death or the making of a gift was a citizen of one of the Contracting States without being a citizen of the other Contracting State, and who would be considered under paragraph (1) as having been domiciled in both Contracting States, shall be deemed to have been domiciled only in the Contracting State of which he was a citizen if: (i) He was domiciled in the other Contracting State in the aggregate less than 5 years during the 7-year period ending with the year of his death or the making of a gift, provided that he was in that other Contracting State by reason of an assignment of employment or as the spouse or other dependent (personne a charge) of a person present in that other Contracting State for such a purpose; or (ii) He was domiciled in the other Contracting State in the aggregate less than 7 years during the 10-year period ending with the year of his death or the making of a gift, provided that he was in that other Contracting State by reason of a renewal of an assignment of employment or as the spouse or other dependent (personne a charge) of a person present in that other Contracting State for such a purpose.
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